Financial Performance - For the three-month period ended September 30, 2024, net income was a loss of $1.998 million, or $(0.10) per diluted share, compared to net income of $1.759 million, or $0.08 per diluted share for the same period in 2023[94]. - Total revenue for the three-month period was $44.519 million, slightly down from $44.591 million in the comparable period in 2023[92]. - The Parent's insurance subsidiaries reported statutory net income of $2.0 million for the nine-month period ended September 30, 2024, down from $8.9 million in the same period of 2023[115]. Revenue and Premiums - Premium revenue for the three-month period increased slightly to $43.782 million from $43.746 million in the comparable period in 2023, while for the nine-month period, it decreased by $2.6 million, or 1.9%, to $133.327 million from $135.906 million[95]. - Net earned premium revenue at Bankers Fidelity increased by $0.4 million, or 1.4%, during the three-month period ended September 30, 2024, but decreased by $2.6 million, or 3.0%, for the nine-month period[105]. - Gross earned premiums from the Medicare supplement line decreased by $1.7 million, or 5.2%, for the three-month period and by $7.4 million, or 7.3%, for the nine-month period ended September 30, 2024[105]. Expenses and Losses - Operating income decreased by $4.3 million for the three-month period and by $10.0 million for the nine-month period ended September 30, 2024, primarily due to unfavorable loss experience in life and health operations[96]. - Insurance benefits and losses incurred increased to $30.760 million for the three-month period ended September 30, 2024, compared to $26.818 million for the same period in 2023[92]. - Insurance benefits and losses incurred at American Southern increased by $2.1 million, or 17.7%, for the three-month period ended September 30, 2024, and by $2.9 million, or 7.7%, for the nine-month period[102]. Ratios and Underwriting - The combined ratio for American Southern was 109.8% for the three-month period ended September 30, 2024, indicating an underwriting loss, compared to 97.9% for the same period in 2023[98]. - The loss ratio for the three-month period ended September 30, 2024, was 86.2%, up from 71.7% in the same period of 2023, while for the nine-month period, it increased to 79.5% from 73.7%[102]. - Commissions and underwriting expenses decreased by $0.5 million, or 11.7%, for the three-month period and by $1.0 million, or 7.7%, for the nine-month period ended September 30, 2024[103]. Investments and Unrealized Losses - Unrealized losses on equity securities were $(1.746) million for the three-month period ended September 30, 2024, compared to $(1.486) million for the same period in 2023[92]. - The Company recognized net unrealized losses on equity securities of $1.7 million during the three-month period ended September 30, 2024, compared to $1.5 million in the same period of 2023[111]. - The Company had net realized investment gains of less than $0.1 million during the three-month period ended September 30, 2024, compared to no gains in the same period of 2023[109]. Cash and Liquidity - As of September 30, 2024, the Company had cash and cash equivalents of $23.0 million, down from $28.3 million at December 31, 2023, primarily due to net cash used in operating activities of $4.8 million[124]. - The Company believes existing cash balances and expected dividends will meet liquidity requirements for the foreseeable future[125]. - The Company has access to low-cost funding through its membership in the Federal Home Loan Bank of Atlanta, with credit availability of approximately $8.2 million as of September 30, 2024[121]. Debt and Borrowings - The Company had outstanding borrowings of $4.0 million under its Revolving Credit Agreement as of September 30, 2024, compared to $3.0 million as of December 31, 2023[123]. - The Company has accrued but unpaid dividends on the Series D Preferred Stock totaling $0.3 million as of September 30, 2024[120]. - The Company has a Revolving Credit Agreement with a maturity date extended to March 22, 2027, and requires maintaining a consolidated net worth of not less than $64.2 million[122]. Internal Controls and Remediation - The Company is in the process of remediating a material weakness in internal control over financial reporting, with remediation efforts ongoing since March 31, 2024[132]. - The Company has implemented a systematic review of underwriting income components for its life products, which includes analytical reports to identify potential anomalies[132]. - The Company is developing a system to perform calculations independently of actuarial models, expected to be operational by December 31, 2024[133]. Stock Repurchase - No common stock purchases were made under the Repurchase Plan during the three-month period ending September 30, 2024, leaving a maximum of 325,129 shares that may yet be purchased[137].
Atlantic American(AAME) - 2024 Q3 - Quarterly Report